Dozens of brokerages and banks, including Morgan Stanley (MS), Goldman (GS) and Citigroup (C), are being sued by a Boston area-based fund over $1.2B of subprime-related losses. The fund claims the banks made untrue statements and violated their own standards for underwriting.

European banks are doing well this morning after European regulators released more details on the stress tests underway. Premarket: DB+1.25%, RBS+0.7%, ING+1.1%, LYG+1.9%, CS+1.3%, BCS+1.8%. (Notable loser: STD -1%)

European regulators released (some) details of the stress tests underway. What we know: The tests will cover 91 banks accounting for 65% of the region's banking assets, and the adverse scenario will be a double-dip recession or sovereign shock. Still MIA: Some key details, including what's considered an acceptable capital level.

A Barclays (BCS) breakup? Easier said than done, responds a Matrix Corporate Capital analyst, as an I-bank spinoff would force Barclays to raise £3B ($4.5B) and possibly sell its stake in BlackRock (BLK).

For the first time, EU officials say European countries will be able to tap an existing €500B ($629M) EU safety net, as needed, if they exhaust national funds on problem banks. The EU's Olli Rehn also confirms stress tests will include " sovereign debt shock in order to reinforce the credibility of results." Premarket: DB+2.2% , UBS+2.7% , ING+3.7% , LYG+3.6% , BCS+1.9% .

The ECB's tender was met with low demand today, a positive reflection on banks' abilities to raise money from capital markets, with a total of €131.93B ($160.92B) allotted. Forecasts had run as high as €250B. The news is lifting European banks, and the euro. Premarket: UBS+2%, STD +4.5%, LYG+1.5%, CS+1.9%, BCS+4.6%, DB+3.25%.

Niall Ferguson says Europe's banks make him nervous. Ferguson says he's amazed how long it took markets to realize that there was a problem with European banks, which were more leveraged than U.S. banks.

"Get ready for the cliff-edge," warns RBS' credit team, anticipating a "collapse" in the price of stocks and commodities as the U.S. and EU economies, and the European banking sector, teeter at the precipice. They're suggesting investors buy maximum long-duration bonds in safe haven markets.

Major European banks are reportedly trying to revive the struggling wholesale finance market with a new kind of enhanced securitized product designed to attract lenders such as pension funds and hedge funds. "It’s basically an issue of credibility," said one senior banker, "and the eurozone has to get its credibility back.”

The U.K.'s new annual bank levy will fall predominantly on the shoulders of domestic banks. More than half of 2011's expected £2B draw will come from Barclays, RBS, HSBC, Lloyds and Standard Chartered. By 2013, that figure will rise to £2B out of an expected £2.5B draw. Premarket: BCS-1.3%, RBS-1.15%, HBC-0.4%, LYG-2%.

Barclays' (BCS) top two execs, John Varley and Bob Diamond, take the stand today in a lawsuit brought against the British bank by Lehman Brothers (LEHMQ.PK). Lehman claims that Barclays underpaid by at least $11B for its North American brokerage.

Barclays PLC is a financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth and investment management. It operates in Europe, the Americas, Africa and Asia.